Microsoft Corp. on Tuesday reported a 2 percent increase in profit for its third quarter, beating analysts' expectations, but cautioned that it does not see a recovery in technology spending anytime soon.

Microsoft reported revenues of $7.84 billion compared with $7.25 billion for the year-ago quarter. For the three months ended March 31, the software company earned $2.79 billion, or 26 cents a share, compared with $2.74 billion or 25 cents a share for the same period a year ago.

"It was a strong quarter in a tough environment," said chief financial officer John Connors.

Microsoft also said it had $46.18 billion in cash and cash equivalents at the end of March.

Xbox

"We feel very good about where we're at with the Xbox in the United States," Connors said. The company also forecast sales of 9 million Xbox consoles by the end of the fiscal year. Connors said Microsoft had no plans to change its target. Many analysts believe Microsoft will cut the price of its Xbox game console, now at $199 in the United States. The company recently slashed the price in Europe.